FBA Brand Purchase - Taxation
Buying income isn’t limited to dividend stocks.
At some point you may buy an income producing asset, a functioning ecom website, or even another small business.
How you do this can have significant tax consequences.
Here’s what to think about.
Buying income isn’t limited to dividend stocks.
At some point you may buy an income producing asset, a functioning ecom website, or even another small business.
How you do this can have significant tax consequences.
Here’s what to think about.
Let’s say you want to buy a functioning FBA business. The business has the following in a corporation:
-A couple of successful brands,
-Supplier contracts with favorable terms,
-Ungated for toys and health on Amazon
-A warehouse lease,
-An engage employee, and
-A website
-A couple of successful brands,
-Supplier contracts with favorable terms,
-Ungated for toys and health on Amazon
-A warehouse lease,
-An engage employee, and
-A website
You and the owner have agreed to a $150k purchase price, but what are you buying?
If you buy the EQUITY/stock of the corporation, you will get $150k of tax basis in the stock, meaning you will likely never recover the basis in the form of a deduction unless you sell the company.
If you buy the EQUITY/stock of the corporation, you will get $150k of tax basis in the stock, meaning you will likely never recover the basis in the form of a deduction unless you sell the company.
If you set up your own entity and buy the ASSETS (all of the operations listed above), you WILL recover that $150k in the course of the business at a minimum of a $10k deduction per year for 15 years, but possibly faster.
$150k of deductions vs potentially none and you have effectively purchased the SAME business.
Deal terms matter.
Let me know.
Deal terms matter.
Let me know.
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